Growth in labour income slowed sharply in Q1 but a rebound seems likely. Even if income growth remains sluggish, households have plenty of scope to reduce savings following a prolonged period of restraint after 2014’s sales tax hike. And with inflation set to remain subdued, we now expect consumer spending to rise by 1% both this year and next. Accordingly, we’ve lifted our 2018 GDP forecast from 0.7% to 1.0%.
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